Unlike other products, watches are made to last a lifetime and often retain their value even after years of use. Moreover, due to their low production numbers and rarity, some of them increase in value over time, sometimes by a factor of 1000.
According to a study*, the global market for luxury watches is expected to grow from $3.4 billion to $6.7 billion between 2019 and 2020. It is expected to grow at a compound annual growth rate (CAGR) of 4.5% over the next six years, reaching a value of approximately $51.3 billion by 2027.
*Report Ocean research
Furthermore, e-commerce has been developing in recent years. Luxury watch brands and distributors are entering the e-commerce market one after another, creating an environment where customers can obtain the actual products without having to visit a store.
There is also the possibility of “revenge consumption” caused by the new coronavirus. The pandemic has prevented people from going out and spending money that should have gone to food, entertainment, and travel, but instead it has gone to luxury goods such as jewelry and luxury watches.
The rapid growth of the luxury watch market in recent years is thought to be due to a combination of these factors.
Why are luxury watches a good investment?
Many people may think that it’s surprising that something that is worn on the body, such as a watch, can become a target for investment.
In fact, the reason why luxury watches can be an investment target has a lot to do with the characteristics of this product and certain circumstances in the industry.
Reason #1: Luxury watches are like works of art or jewelry
Investment targets with similar characteristics to luxury watches include works of art, works of art, and jewelry such as gems and pearls.
Watches can range in price from just a few hundred to thousands.
A watch costing a few hundred to a few thousand would be treated as a fashion item to be worn every day, but one costing several thousand or more would be like a work of art to be displayed in a museum.
Luxury watches are internationally recognized for their value and have historically been the jewelry of royal families and royalty. Jewelry watches with gems, platinum, or gold are considered especially valuable.
Just as physical platinum and gold can be invested in, so can luxury watches.
Reason #2: If you take good care of it, it will run semi-permanently.
There are two types of watches: mechanical and quartz. There are two types of watches: mechanical and quartz. As I will explain in more detail later, mechanical watches will continue to run almost indefinitely. This is if you don’t neglect to take care of it.
However, this is not true for all mechanical watches. It depends on the manufacturer’s support system. In the case of second- and third-rate mechanical watches, the manufacture of parts may stop after 10 years. When this happens, the watch becomes unrepairable and its value naturally drops.
On the other hand, luxury watches from top brands often come with a long-term warranty. For example, the first luxury watch that comes to mind is Rolex. Rolex comes with a 30-year warranty period. Some of the top brands even offer a lifetime warranty.
A luxury watch will not lose much of its value unless it stops working. It should be repairable for a long time. Keep in mind that this is a prerequisite for owning a luxury watch as an investment.
Reason #3: Low circulation compared to demand
Luxury watches are made one by one by skilled craftsmen. For this reason, they cannot be produced in large numbers compared to inexpensive mass-produced watches, and therefore, their circulation is absolutely low.
This means that they are rare and highly valued, so they remain highly valuable even after a long time.
In addition, the fact that they are made one by one by the hands of master watchmakers means that there are only a few people who can make that watch with the same technology. For this reason, it is unlikely that the exact same model will be resold, making it easy to get a premium.
As a buyer, it is easy to be tempted to buy the watch even if it costs more than the list price, and the price easily rises. This is one of the reasons why luxury watches are a good investment.
Points on how to choose a luxury watch as an investment wisely
Point 1: Try to choose a mechanical watch rather than a quartz watch.
As mentioned above, there are two types of drive systems for watches: quartz and mechanical.
Quartz watches are powered by batteries, so they become unusable when the electronic circuitry becomes outdated, and their internal structure is simpler than that of mechanical watches, making them less valuable as assets. In general, the lifespan of electronic circuits in quartz watches is said to be 10 years.
Mechanical watches are made up of a complex combination of small parts and operate without batteries.
Since it can run semi-permanently depending on maintenance, mechanical watches are more recommended for their asset value.
There are also two types of functional watches: automatic and manual. In recent years, the “self-winding” type, which automatically adjusts the time, tends to be more popular.
Point 2: The choice of belt material is metal or leather.
Mechanical watches are overwhelmingly recommended for the body of a luxury watch, but the belt should be made of either metal or leather.
Any other material will give you a cheap feeling and reduce the value of your investment. If you are considering a luxury watch as an investment, the belt should be made of nothing but leather or metal.
Metal is less likely to deteriorate and is more durable, so it is less likely to lose its value in terms of being able to be used for a long time.
Leather belts are lighter and softer than metal belts, making them more comfortable to wear and more valuable in that they can be worn in any situation. The fact that the leather part can be replaced as needed is also a big attraction.
Point 3: Choose a watch based on its unique features (chronograph, water resistance, etc.)
When choosing a luxury watch as an investment, it is important to consider the specific functions of the watch. For example, water resistance, calendar function, GMT function (a function that displays the time in several countries), and chronograph (stopwatch) are typical examples.
These functions are the result of the craftsmanship of the watchmaker, and they add high value to the watch. The more functions that are not available in ordinary watches, the more rare and valuable they become.
It is also a good idea to research the features of popular models at the time and the trends of the features that are likely to increase in value, as the features that attract the attention of watch enthusiasts are likely to increase in price.
Patek Philippe Nautilus – costs from 13.000 euros to 130.000 euros
Rolex Presidential – costs from 10.000 euros to 60.000 euros
Santos de Cartier – costs from 4.000 euros to 8.000 euros
Richard Mille McLaren – costs from 190.000 euros to 325.000 euros